SHANGHAI MUNICIPAL FOREIGN ECONOMIC RELATIONS AND TRADE COMMISSION,
SHANGHAI MUNICIPAL FINANCIAL BUREAU, SHANGHAI MUNICIPAL ADMINISTRATION OF
INDUSTRY AND COMMERCE, SHANGHAI MUNICIPAL BUREAU OF PUBLIC SECURITY THE PEOPLE' S
BANK OF CHINA, SHANGHAI BRANCH SUGGESTIONS ON THE IMPLEMENTATION OF "PROVISIONAL
REGULATIONS OF SHANGHAI MUNICIPALITY ON ENCOURAGING TRANSNATIONAL COMPANIES TO
ESTABLISH THEIR REGIONAL HEADQUARTERS" In order to better implement the
"Provisional Regulations of Shanghai Municipality on Encouraging Transnational
Companies to Establish Their Regional Headquarters" (hereinafter referred to as
"Provisional Regulations" ), the following suggestions on implementation are put
forward: I. Verification and examination for approval (I) Regional headquarters
set up in the form of investment companies In setting up their regional
headquarters in Shanghai in the form of investment companies, foreign investors,
except for those conforming to the provisions in Article 5 of "Provisional
Regulations" , should apply to the Municipal Foreign Economic Relations and Trade
Commission and submit the materials listed in Article 7 of the "Provisional
Regulations" as well as the following documents: 1. Application signed by the
legal representative of the investment company; 2. Letter of authorization for
basic functions of the regional headquarters signed by the legal representative
of the parent company; 3. Approval certificate, business license and report of
capital verification ( duplicates) of the investment company; 4. Approval
certificate and business license (duplicates) of the enterprise invested by the
parent company or the investment company in China; The Municipal Foreign
Economic Relations and Trade Commission will complete the examination within 30
days from the date of receiving the application and other documents and issue
the letter of verification on approval and submit it to the Ministry of Commerce
for record. (II) Regional headquarters set up in the form of management
companies Foreign transnational companies when setting up their regional
headquarters in Shanghai in the form of management companies, except for those
conforming or primarily conforming to all the provisions of Article 5 of the
"Provisional Regulations" , should submit the following materials to the
Municipal Economic Relations and Trade Commission: 1. Application for setting up
management company, report of feasibility study and articles of association
signed by the foreign investor; 2. Letter of authorization for basic functions
of the regional headquarters signed by the foreign investor; 3. Credit
certificate, document of registration (duplicates) and certificate of
identification of legal representative (duplicate); 4. Balance sheets of the
last 3 years of the foreign investor; 5. Approval certificate, business license
and report of capital verification (duplicates) of the enterprise with foreign
capitals invested and set up in China by the foreign investor; 6. Letter of
authorization signed by the foreign investor for the legal representative
(representative of the regional headquarters) to be appointed for the management
company, the resume and corresponding identification (duplicate of the ID card)
of the legal representative to be appointed; 7. Foreign investor investing in
the registered capital of the management company with his profit in Renminbi
should submit relevant certification and tax-paid proof as necessary documents
for examination and approval and capital verification; 8. Other documents
required by the Municipal Economic Relations and Trade Commission. The above
documents should all be the originals, except those stated as duplicates. For
documents signed by a non-legal representative, a letter of authorization by the
legal representative should be submitted. When application for setting up
regional headquarters is entrusted to a legally set up intermediary agent, a
letter of authorization signed by the legal representative of the foreign
investor should be submitted. The Municipal Economic Relations and Trade
Commission should complete the examination and approval formalities within 30
days as from the date of receiving all the application materials. The Commission
will issue approval certificate to the company when approved and register it
according to the regulations of administration of industry and commerce. It
should also issue the verification certificate to those conforming to the
qualifications of regional headquarters. II. Registration of Management
companies (I) Registration for Establishment The applicant enterprise should
register with the Municipal Administration of Industry and Commerce within 30
days after receiving the "Approval Certificate of Enterprise with Foreign
Capital" issued by the department in-charge under the Foreign Economic Relations
and Trade Commission and submit the following documents and certificates: 1.
"Application for Registration by Enterprise with Foreign Capital" (a form made by
the Administration of Industry and Commerce); 2. Articles of Association and its
approval (duplicate) and a copy of the "Approval Certificate of Enterprise with
Foreign Capital" ; 3. Notification of pre-approval of the name of the enterprise;
4. Appointment of post of legal representative and directors; 5. Certification
of accommodations (for rented quarters, a lease agreement and certificate of
property right [duplicate] are required and for privately owned house, only a
certificate of property right [duplicate] is necessary); 6. Other documents and
certificates. The above-mentioned documents may be exempt if they have already
been submitted when the name of the enterprise is being registered. The original
documents and certificates should be submitted when duplicates are not specified
in the previous articles. When only duplicates are submitted, it is necessary to
have them checked with the originals by the registration authorities and affixed
with a seal, stating that there is no difference in contents when checked with
the originals. When complete documents and certificates are submitted and proved
through examination to meet the requirement for registration, a "Business
License" will be issued within 5 working days. (II) Registration of regional
headquarters set up Pudong New Area The management company registered in Pudong
New Area and certified by the Foreign Economic Relations and Trade Commission as
a regional headquarters may register with the department of industry and
commerce in Pudong New Area. III. Preferential policies (I) Financial support to
the training of employees When a regional headquarters provides key technical
ability training for its employees and this is certified by the Municipal Labor
Security Bureau and examined and verified by the tax department, it may obtain
financial support according to stipulated regulations A regional headquarters
receiving its certification and registered with the administration of industry
and commerce and tax department in Pudong New Area will enjoy preferential
policies of Pudong New Area. The Pudong New Area Government is responsible to
promulgate and explain these preferential policies. (II) Personal income tax
Subsidies to foreign employees of regional headquarters for their children' s
education, language training, food, and relocation may be exempted from or
reduced in personal income tax according to the laws and regulations after
having examined and verified by the tax authorities. (III) Import and export
operation rights Regional headquarters of trans-national companies are
encouraged to Set up in Shanghai their purchasing centers for export. Investment
companies serving as regional headquarters obtaining the operation right for
import and export after approval may export domestic commodities not involving
export quotas and not managed by license and may enjoy tax reimbursement for
their export commodities. The investment company when approved may import from
its parent company a small amount of products not managed by import quotas that
are identical or similar to those produced by the enterprise it has invested for
trial sale in the domestic market. It may also purchase the products from the
enterprise it has invested to systematically agglomerate and sell in both the
domestic and oversea markets. If the products made by the enterprise it has
invested cannot meet the requirement for systematic agglomeration it may be
permitted to purchase in the country and abroad the products necessary for the
systematic agglomeration. (IV) Regional headquarters with research and
development functions The regional headquarters set up in Shanghai with R &
D functions after certified by the Municipal Commission of Science and
Technology, the Municipal Planning Commission, the Municipal Economic Relations
and Trade Commission and municipal financial and tax departments as an
enterprise of new and high technology may enjoy the preferential policies
stipulated for hi-tech enterprises. IV. Management of funds Commercial banks in
Shanghai are encouraged, in line with supervisory requirements of the People' s
Bank of China and the Bank Supervisory Committee, to enthusiastically provide
such banking services as settlement and currency exchange necessary for
trans-national companies. A regional headquarters, a stock-held enterprise and
the commercial bank may sign a tripartite agreement and operate through the
basic settlement account in that bank or its branches. The commercial bank
should follow the "Provisional Regulations on Intermediary Business of
Commercial Banks" promulgated by the People' s Bank of China to vigorously
explore the intermediary business to meet the requirement by the regional
headquarters for the management of funds, strengthen the management and control
of the business, establish the information management system of supervision and
report corresponding to the intermediary business so as to reflect the
developments and risks of the business in a timely, accurate and complete
manner.. V. Exit and entry (I) Temporary entry Foreign nationals in the regional
headquarters of transnational companies (hereinafter referred to as "Regional
Headquarters" ) set up in Shanghai, who need to enter temporarily many times, may
apply for multiple entry visiting visas in a year. Senior foreign managerial and
hi-tech personnel may apply for multiple visiting entry visas for 2-5 years, the
duration of each stay not exceeding a year. (II) Long-term residence 1. The
period of validity of residence permit for the following foreign nationals may
be extended: Legal representatives, general managers, deputy general managers
and financial controllers of regional headquarters in Shanghai of transnational
companies may apply for a residence permit for foreign nationals with a validity
of 2-5 years. Other managerial staff of regional headquarters in Shanghai of
transnational companies may apply for a residence permit for foreigners with a
validity of 3 years. Legal representatives and general managers of enterprises
affiliated to the regional headquarters in Shanghai and with a registered
capital of $30 million and above may apply for a residence permit for foreigners
with a validity of 2-5 years. 2. The above foreign nationals when applying for
residence permits for foreigners may also apply, at the same time and in line
with the actual needs, multiple working entry visas for the same period of the
residence permits; 3. The spouses and children under the full age of 18 of the
above foreign nationals may apply for multiple working entry visas for the same
period of the residence permits for foreigners. (III) Coming to Shanghai under
urgent circumstances When foreign nationals invited by regional headquarters for
a temporary visit to Shanghai are not able to apply for entry visas in our
embassy or consulate abroad for reasons of unexpected matters, they may apply
for port visas at the port visa department of the Exit-Entry Administrative
Department of Shanghai Bureau of Public Security (except the nationals of those
countries not acceptable for port visas as stipulated by regulations). (IV)
Going to Hong Kong and Macao Chinese employees in regional headquarters going to
Hong Kong and Macao for business needs may apply for "Pass for Visits to Hong
Kong and Macao" . (V) Going to Taiwan Chinese employees in regional headquarters
going to Taiwan for business needs when submitting traveling documents for
visiting Taiwan and approval letters from Office of Taiwan Affairs of the State
Council may apply and obtain in priority the "Pass for Visiting Taiwan for
residents on the Mainland" . (VI) Going abroad Of the Chinese employees in
regional headquarters going abroad for business needs, Shanghai residents may
apply for passports with their residence booklets and identification cards and
people from other provinces or cities may apply at the Exit-Entry Department of
Shanghai Bureau of Public Security with their identification cards, temporary
residence permits or resident permits in Shanghai. (Aug. 21, 2003)
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